Auctions with online supply

Moshe Babaioff*, Liad Blumrosen, Aaron Roth

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

18 Scopus citations


We study the problem of selling identical items to n unit-demand bidders in a setting in which the total supply of items is unknown to the mechanism. Items arrive dynamically, and the seller must make the allocation and payment decisions online with the goal of maximizing social welfare. We consider two models of unknown supply: the adversarial supply model, in which the mechanism must produce a welfare guarantee for any arbitrary supply, and the stochastic supply model, in which supply is drawn from a distribution known to the mechanism, and the mechanism need only provide a welfare guarantee in expectation. Our main result is a separation between these two models. We show that all truthful mechanisms, even randomized, achieve a diminishing fraction of the optimal social welfare (namely, no better than a Ω(log log n) approximation) in the adversarial setting. In sharp contrast, in the stochastic model, under a standard monotone hazard-rate condition, we present a truthful mechanism that achieves a constant approximation. We show without any condition on the supply distribution, no mechanism can achieve a constant fraction approximation. We also characterize a natural subclass of truthful mechanisms in our setting, the set of online-envy-free mechanisms. All of the mechanisms we present fall into this class, and we prove almost optimal lower bounds for such mechanisms. Since auctions with unknown supply are regularly run in many online-advertising settings, our main results emphasize the importance of considering distributional information in the design of auctions in such environments.

Original languageAmerican English
Title of host publicationEC'10 - Proceedings of the 2010 ACM Conference on Electronic Commerce
Number of pages10
StatePublished - 2010
Event11th ACM Conference on Electronic Commerce, EC'10 - Cambridge, MA, United States
Duration: 7 Jun 201011 Jun 2010

Publication series

NameProceedings of the ACM Conference on Electronic Commerce


Conference11th ACM Conference on Electronic Commerce, EC'10
Country/TerritoryUnited States
CityCambridge, MA


  • approximation
  • mechanism design
  • online supply
  • truthful auction


Dive into the research topics of 'Auctions with online supply'. Together they form a unique fingerprint.

Cite this